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Do Open Source Developers Respond to Competition? the Case Study

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Do Open Source Developers Respond to Competition? the Case Study Review of Network Economics Vol.6, Issue 2 – June 2007 Do Open Source Developers Respond to Competition? The Case Study ALEX GAUDEUL * School of Economics, University of East Anglia Abstract This paper traces the history of , the open source typesetting program. was an early and very successful open source project that imposed its standards in a particularly competitive environment and inspired many advances in the typesetting industry. Developed over three decades, came into competition with a variety of open source and proprietary alternatives. I argue from this case study that open source developers derive direct and indirect network externalities from the use of their software by others and must therefore consider non-developers’ needs to make their software more attractive to a broader audience and more competitive with proprietary alternatives. 1 Introduction This paper offers an analysis of the competition between open source (OS) and proprietary software systems through a study of the long-term development dynamics of the typesetting software.1 The project was launched in 1978 under an open source license, long before other better known OS projects such as Linux. This case study thus draws on a long history. In this article, I focus on the dynamics of competition between OS and proprietary typesetting software. I analyze the multi-period strategies by which they borrowed from each other, complemented each other and reacted to advances on the competing side. A variety of developers developed applications, proprietary or otherwise, for , an open source typesetting platform. On one side, users chose whether to adopt as their * School of Economics, University of East Anglia, Norwich NR4 7TJ United Kingdom. E-mail: [email protected]. I would like to thank William Adams, Jacques André, Nelson Beebe, Barbara Beeton, Karl Berry, Lance Carnes, Thomas Esser, David Fuchs, Bernard Gaulle, Hans Hagen, Yannis Haralambous, Jim Hefferon, David Kastrup, Donald Knuth, Leslie Lamport, Wendy McKay, Barry MacKichan, B. Mahesh, Frank Mittelbach, Oren Patashnik, Simon Pepping, John Plaice, Fabrice Popineau, Sebastian Rahtz, Denis Roegel, Chris Rowley, Joachim Schröd, Karel Skoupý, Hàn Thế Thành and all other participants in the project whom I met and interviewed. Special thanks are due to Hans Hagen for his help in editing this paper. I would also like to thank Jacques Crémer, Bruno Jullien, Jean Tirole and Hal Varian for their advice, and an anonymous referee for helpful comments. The support of the CNRS and of the ESRC Centre for Competition Policy is gratefully acknowledged. All errors and omissions are mine. 1 is the core of the typesetting program while most users of use the set of macros. Both the terms and are used to designate the whole of the project. 239 Review of Network Economics Vol.6, Issue 2 – June 2007 typesetting platform, or competing proprietary platforms, and if they chose , also chose what specific applications to use. On the other side, developers chose whether to develop for the platform or for another platform, and if they chose , chose under what license they would release their contributions. This depended on the nature of the application they wished to develop. It also depended on the presence of and ease of access to other development platforms in the proprietary world. Decisions of users and developers were complementary: the diffusion of was closely dependent on the dynamics of its development and on the technological changes that happened outside of the world. OS developers and users recognized this; they formed coalitions and took strategic decisions to influence the direction of the development of . This paper illustrates a simple basic hypothesis: while OS developers improve open source software (OSS) for their own purposes, in order to better fulfil their needs, they also derive benefits from the use of their software by others (network externalities). This encourages them to broaden the software’s user base by providing features that may be of no direct use to themselves or that may be low on their own priority lists. For example, they work to facilitate the initiation into the use of the software, or to make the software more accessible and easy to use. They also want to maximize the benefit of network externalities by agreeing on and following a variety of standards in the development, licensing and maintenance of their contributions to the software. They want the software to behave the same way on any user’s machine, they want new contributions to fit guidelines so they can be integrated seamlessly into the software distribution and they want this “official” software distribution to be used by all. Those objectives are only achieved by agreeing with others on how the software should behave and by coordinating the ensuing development efforts with other developers. Developers have to balance their need for independence in their development decisions with the need to coordinate with other developers and they have to be receptive to the needs of users. OS developers also have to take account of the proprietary offering and negotiate the positioning of their software in the market in order to maintain or increase their user base. Not only do they have to think in strategic terms but they also have to impose a level of discipline and a sense of direction onto the development of the software, which is more difficult. This is the purpose of OSS organizations. Those organizations provide a platform where users can express their needs and where developers can express their ideas and goals. Users and developers make sense together of the software’s position in its development area and negotiate development objectives. This process give rise to complex organizational dynamics whereby developers position themselves, form coalitions, try to convince others by appealing to shared interests or the common good, etc. The basic hypothesis according to which developers and users consider network effects in their development and consumption decisions is used to explain a number of patterns in the development of the development platform. The next section is an analysis of the existing literature on the topic. 2 Literature review This paper is a study of the competition in the provision of a potentially excludable but non-rival good, software. When a good is non-excludable, then it is generally assumed it has to be publicly provided. If it is made excludable, by putting it under copyright for 240 Review of Network Economics Vol.6, Issue 2 – June 2007 example, then it is assumed it is privately supplied in the same way as most standard goods. However, the situation in the software industry is different: some software is provided under open source licenses,2 while some other software is provided under proprietary licenses. This is a mixed industry where for-profits and nonprofits coexist (Kuan, 2001). Open source software is privately provided through voluntary contributions (Bergstrom, 1986). OSS organizations differ from other nonprofits in that OSS production is not usually publicly subsidized, it does not rely in any significant way on private donations for its development, and its provision is not directed by the State or any other formal institutions or interest group. Open source projects are the result of the work of individually motivated developers and it is difficult for any institution to direct their development. This paper extends the literature on public goods in the specific context of open source provision by examining the dynamics of the private provision of a public good in a competitive setting. How does an OS organization react to competition, both from other OS projects and from proprietary projects? How does an open source organization adapt to changes in its market environment? How do commercial organizations adapt to the presence of OS competition? Will each type of organization specialize in specific areas of software development? Will they serve different types of customers or develop different software parts? Are there exchanges and synergies between each type of organization? I will build on the existing literature on OS methods of production, which deals principally with (1) the organization of development and (2) the incentives of OS developers. I will then be able to present (3) the literature on competition between OS and proprietary organizations. 2.1 Organization: Far from being the “bazaar” evoked in Raymond (2001), open source development is hierarchic and subject to peer review. Small groups of developers contribute most of the “core” code. Other developers provide support for specific systems or functionalities while some other volunteers provide user support and help maintain the infrastructure of the project (Mockus, 2005; and Lakhani, 2002).3 Development is done module by module in an incremental way, with each module a relatively independent part of the complete software. Work is thus fragmented to the individual or small team level, with limited need for central coordination (Krogh, 2003a). Central coordination is done by the lead developers, who also contribute the most to the software’s development (see, for example, Kogut, 2001, Table 3) and are able to influence its course (see, for example,e Bezroukov, 1999 on the role of the leader and conflicts between developers). 2.2 Incentives A developer who develops software that is under OS licensing terms has two sets of motives (Lakhani, 2005). One set of motives is own-use or own-enjoyment; she wants to develop software that she needs or enjoys developing (Hippel, 2005). The other set of 2 OS developers keep the copyright over their contributions to an OS project, but are limited in its use; it can be asserted only to prevent others from using their contribution without acknowledgment (Berkeley licenses (BSD)) or from using it as part of proprietary software (GNU Public License (GPL)). 3 Fitzgerald, 2001; Fitzgerald, 2002; and Krogh, 2003b introduce special issues on this topic.
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